Venezuela, Russia in joint oil venture

[Judi Lynn]

Venezuela, Russia in joint oil venture
Friday, 24 May 2013 11:49
Posted by Parvez Jabri

BARCELONA: Venezuela and Russia formed a joint venture Thursday to produce 120,000 barrels of oil a day by 2016 in two fields in the Orinoco Heavy Oil Belt.

Russia will loan Venezuela $1.5 billion to finance the development of the fields under the terms of the agreement, and put up $1.1 billion for a 40 percent share in Petrovictoria.

The agreement establishing Petrovictoria was signed by the president of the state-owned Petroleos de Venezuela (PDVSA), Rafael Ramirez, and the president of Russian state oil company Rosneft, Igor Sechin.

PDVSA will sell to Russia 72 percent of the heavy and extra-heavy crude produced by the company, which has a long-term goal of producing 400,000 barrels a day.

More:
http://www.brecorder.com/markets/energy/europe/120852.html

[Socialistlemur]

1. The Venezuelans tend to confuse corporations with nations

The contract is between Rosneft and PDVSA, not between Venezuela and Russia. Rosneft is partially owned by the Russian Federation, but it's owned in part by BP, the old British Petroleum. The Venezuelans like to announce these deals as if they were country to country because they seem to be mentored by Cubans and they have a bit of jet lag, they don't realize the old communist style country to country agreements are not used. As a matter of fact, I seriously doubt Pdvsa's lawyers would ever allow a contract with a sovereign nation. This becomes a treaty and represents more of a commitment.

Regarding the news itself, I noticed they say Petrovictoria will sell 72% of the crude to Rosneft (it's not the Russian state). I bet Rosneft will then sell the oil to USA refineries. It's an interesting mechanism to provide political cover, because PDVSA is always saying they don't want to sell so much oil to the US market. Which brings up another point, this oil is similar to the Canadian tar sand crude. It will compete with the blend being shipped by pipeline from Alberta.